Bulgarian City of Vidin Sells Its Last Farm Lands to Benefit Arms Dealers

At the last meeting of the General Assembly of the Vidin City Hall on November 11, 2018, a proposal was submitted by the Deputy Mayor for Economy and Energy, Tzvetan Asenov (former regional governor from the ruling party Citizens for European Development of Bulgaria, GERB) for the sale of 40 plots of arable agricultural land for the amount of BGN 987,615 as an initial tender price. The estimate is about 40% lower than the current prices in the area, and the buyer is foretold – a company of arms traders “Jotov & Son”.

The lands have a total area of over 1,126 decares and represent about 15% of the municipality’s real estate. This is practically all the arable land on its territory. Arguments for the sale are not mentioned. The municipality has no overdue liabilities and such a sale is not even included in the plan for 2018, while the parameters set in this plan are for the sale of land worth BGN 90,000, over ten times less than the proposed transaction.

The minutes of the Vidin meeting reveal that part of the municipal councilors oppose this proposal. Representatives of local farmers are also against it. The deal, however, is backed by representatives of the Reform Party, GERB, the Bulgarian Socialist Party (BSP) and the Movement for Rights and Freedoms, who all together voted for it. Subsequently, the General Assembly instructed the Mayor of Vidin to draw up the tender procedure and conduct a tender for the sale of the arable farming land of the Vidin people.

The tender procedure is actually a formality to dress in a legal form the deal with “Bononia Estate” – the company that has submitted an investment proposal to buy the land. Several facts speak to it. First, all 40 properties are sold only together, which practically eliminates many of the participants. Second, a deposit requirement of BGN 500,000 has been introduced for the bidding, which cannot be part of the amount to be paid by the winning bidder, but will be returned after the deal. This eliminates directly local farmers who are unable to block such an amount.

In the submitted investment proposal, the “investor”, himself, has indicated which plots and which land he wants to buy. The selected land is located in different areas. Despite the vast area of land declared for purchase, there has been no public debate, and everything has been being prepared hastily and in the dark. There are no explanations why this is needed and what these funds will be spent on.

The word “investor” is between quotation marks, because in this case, the investment does not include the opening of new production facilities and new jobs, but just the sale of farming land and on top of it – at a loss. Due to the difference between the announced starting price and the assessment made by the municipality and the average market price, the municipality is set to lose BGN 300,000-400,000.

At previous similar auctions, the properties have always been sold separately, so all interested parties have been able to bid for each of them and the municipality has gotten the best and top price for each of its properties.

Investor with good government ties

“Bononia Estate” is owned by the arms dealers Angel Jotov and his son Ivailo Jotov (Honorary Consul of Uganda in Bulgaria). They have been in the arms business since 1991, according to the company’s portfolio. Ivaylo Jotov was among the arms traders taken on a visit to India by former BSP Prime Minister, Sergei Stanishev.

The close relationship of the company with the current government is demonstrated by the fact that on October 25, the Ministry of Defense chose “Jotov & Son” to repair and maintain the training aircraft L-39, preferring them to the original airplane manufacturer, the Czech Aero Vodochody.

Since “Jotov & Son” has no capacity for such repairs, it will hire as subcontractor the Ukrainian company “Odessa Aviatsieniy Zavod” (Odessa Aviation Plant). Aero Vodochody said they cannot be held responsible for the aircraft after the repairs, while the certificates issued by the company for extending the total technical resource and new “between-repairs” resource will be no longer valid.

“Jotov & Son” was also involved in a scandal in 2010 for loaning money to a retired army officer to bribe officials close to the ruling GERB to appoint him as Deputy Defense Minister. The official took the money, but the appointment did not happen. The deceived officer has written in its complaint to the Interior Ministry and the Prosecutor’s Office that he believes that “Jotov & Son” has given him the money in an attempt to “buy” political influence in the Ministry of Defense.

In addition to state-guaranteed arms supplies, the Jotov family, following the stereotypes of the Bulgarian nouveau-riche, invests in golf and winemaking. But despite their great potential, they do not shy away from European Union (EU) funds, on the contrary – they even seek them. The former name of “Bononia Estate” was “Terra Bononia”, which has won two projects worth BGN 436,000 under the Rural Development Program (RDP) – for the purchase of wine and fruit-growing equipment for organic and conventional production and for the purchase of viticulture equipment.

Business deal without economic logic

Literally, just days after the decision of the Vidin Municipal Council, lawmaker Vladimir Toshev, the regional coordinator of GERB in Vidin, said in Parliament that the Vidin municipality (the poorest region in the EU) is flourishing and there are no overdue liabilities, financial difficulties and that “Vidin ranks first in Bulgaria and even beats Sofia by investment per capita”.

It is unclear whether the MP has included in the counting of the “investments” the sale of the land. It is clear, however, that in such a good financial situation, each bank would grant a loan to the municipality if there is an urgent need for that one million. The land itself is a source of income for the municipality, and the amount of the rent when the land is lent to farmers at a tender reaches over BGN 120 per decare per year, therefore with a good management of the municipal properties, the Vidin City Hall could receive these BGN 987,000 in seven to eight years while remaining the owner of the properties.

Obviously, this business deal has no economic logic. And when such is missing, but there is a will to move the deal quickly and in the dark, doubts about another logic arise – corruption. Moreover, the Vidin City Hall is in the focus of the investigation into #GPGate. The parallel secret accounting books of consultancy companies that Bivol published, contain entries about commissions (bribes) paid to the former mayor of Vidin for a water project.

The chairman of the Association BOETS (Fighter) Georgi Georgiev, who is from Vidin, also sees the deal with the land as corrupt, while the Association is preparing to submit a signal to the Prosecutor’s Office in an attempt to stop the scandalous arrangement.

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